(Bloomberg) -- U.S. job growth accelerated in May and the unemployment rate fell, signaling firms are making some progress filling a record number of openings as the economy powers up.
Payrolls increased by 559,000 last month after a revised 278,000 gain in April, according to a Labor Department report Friday. The median estimate in a Bloomberg survey of economists was for a 675,000 rise. The jobless rate dropped to 5.8%.
Employers are pressing to get headcounts in line with a resurgence in demand. May was an inflection point in the reopening of the economy because of increased coronavirus vaccination rates, more social activity and fewer business restrictions across most of the U.S.
The payrolls gain leaves the U.S. labor market 7.6 million jobs short of pre-pandemic levels. A broader improvement in the labor market requires faster job growth among service providers, like the leisure and hospitality industry, that have suffered a more lengthy disruption from the health crisis.
At the same time, the recovery in employment may remain bumpy as childcare obligations, enhanced jobless benefits, skills mismatches and supply shortages impede hiring efforts.
Long-term Treasury yields slid, while inflation expectations plunged and dollar declined. U.S. stock futures moved higher.
The shortfall in the level of payrolls, along with views that recent inflationary pressures will prove temporary, help explain why Federal Reserve officials will hold the line on their ultra-easy monetary policy.
“Remaining steady in our outcomes-based approach during the transitory reopening surge will help ensure the economic momentum that will be needed as current tailwinds shift to headwinds is not curtailed by a premature tightening of financial conditions,” Fed Governor Lael Brainard said Tuesday.
Restaurants reported the largest payrolls increase last month, with a gain of 186,000 jobs, the Labor Department’s report showed. Health care and education also reported notable increases, while employment in construction decreased for a second month.